The Republic of Korea Defence Industry – Achieving Global Prominence

Since August 2022, the Republic of Korea (ROK) defence industry has clearly demonstrated that it has become a global player in defence industrial terms. The decision by Poland, a NATO member, in August 2022 to invest in a vast quantity of South Korean defence equipment ranging from advanced jet trainers to tanks, to self-propelled artillery and multiple rocket systems, is further proof that their industry is competitive globally and at the highest level.

Today the South Korean defence industry can justly point to its success in Europe, one of the most sophisticated and competitive global defence marketplaces, to demonstrate the variety of defence solutions it has on offer. More than that, South Korean industry can also point to the fact that it has a global footprint. Their customers can be found in Australia, Southeast Asia, India, the Middle East, Africa and South America.

In March this year, the Stockholm International Peace Research Institute (SIPRI) published a report entitled “Trends in International Arms Transfers, 2022”. The SIPRI report classifies the ROK as ninth on a list of the top 25 largest exporters of major arms. According to SIPRI, between 2013 and 2017 the ROK had a market share in global defence exports of 1.3%. Between 2018 and 2022, SIPRI classify the ROK defence export market share as growing to 2.4%. This makes the growth in market share percentage between 2013-2017 and 2018-2022, a massive 74%! No country in the top 15 defence exporters increased their market share to such an extent according to SIPRI figures. Even more significant is that the SIPRI figures did not include the major contracts signed with Poland; had that been the case, then the position of the ROK in the league of global defence exporters would have undoubtedly been higher.

There was a time when the ROK authorities would point to the Israeli defence industry as their inspiration and comment that their ambition was to achieve a similar market share to that of Israel. In 2008, the ROK Defense Acquisition Program Administration (DAPA) suggested that the ROK and Israel would increasingly be regarded as competitors in defence export markets. This was at a moment when the ROK industry would reach USD 1 Bn in export sales for the first time, up from sales of USD 850 M in 2007.

At that point in time, the capabilities of the Israeli defence industry far outstripped those of the ROK, indeed the ROK was a significant customer of Israeli defence technology. However, according to the SIPRI report on arms transfers, the South Korean defence industry has outstripped the Israeli industry in terms of export performance. Between 2013 and 2017, the Israeli share of global defence exports was 2.6%, but between 2018 and 2022, it had declined to 2.3%, a percentage decline of 15% according to the report. The SIPRI data has Israel as the tenth largest defence exporting country, with the ROK in ninth place.

In many respects, given that the ROK has been so successful in increasing its defence exports should not be a surprise. In terms of gross domestic product (GDP), the World Bank lists the ROK as the tenth largest economy in the world. Once seen as nothing more than a producer of low cost/low sophistication products, the scope and capabilities of the South Korean economy have been totally transformed. Brands such as KIA and Hyundai are now major players in the automotive sector. Likewise, Hyundai Heavy Industries (HHI) and Daewoo Shipbuilding & Marine Engineering (DSME) are dominant players at the high end of merchant shipbuilding. The ROK is a major producer of semiconductors and in Samsung, the country has a major player in consumer electronics and telephony. Moreover, the ROK has sold nuclear power stations to the United Arab Emirates (UAE) and even has a space programme focused on satellite launches. Clearly, the ROK is a highly sophisticated and diversified economy.

Industrial Genesis

The fact is that today’s highly sophisticated and diversified South Korean economy is an incredible achievement. Looking back to July 1953 and the Armistice that ended the Korean War (1950-1953), the territory of the ROK was essentially a wasteland. There was hardly any infrastructure left, although to be fair, there was not much infrastructure to start with in the south of the Korean peninsula. In the Japanese colonial era (1910-1945), the economic centre of Korea was in the north of the peninsula, within the territory of today’s Democratic People’s Republic of Korea (DPRK). It was here that the raw materials and the associated extractive industries, along with heavy industry, were located. In the south (ROK today), agriculture was the most important economic activity.

Even though DPRK territory had been devastated by the war, post-1953, economic aid and assistance from the Soviet bloc and China saw the DPRK recover quickly. The situation was totally different in the ROK, where a considerable amount of foreign aid was received, though much of this was wasted by the Syngman Rhee regime (first ROK president), arguably because his administration had no vision of the sort of economic structure that the ROK would need. Rhee had no option but to resign in April 1960, resulting in a period of chaos and in May 1961, there was a military coup led by General Park Chung Hee.
Park would become the third President of the ROK after he won the 1963 election. He would remain the dominant figure in South Korean politics until his assassination in October 1979. Undoubtedly, Park was a dictator, and his regime took a brutal line as regards dissent, yet it was the Park era that triggered the country’s economic transformation and laid the foundation for what the ROK is today. The Park government encouraged foreign direct investment (FDI) which received a favourable response by both US and Japanese companies. The government also wanted to develop South Korean industry through the establishment of national champions. This led to the development of the ‘Chaebol,’ family-run conglomerates which would establish a large number of subsidiaries. Examples of Chaebol are Hyundai, Samsung, LG Group, Hanwha, Doosan and Hanjin.

The Park government would also play a critical role in the development of the South Korean defence industry, with the catalyst for this being a desire to upgrade the country’s military capabilities and reduce dependence on the US. Equally as important was the belief that the acquisition of advanced defence technologies would then be applicable to the technological development of the broader national economy. This eventually led to the ‘Yulgok Plan’, which essentially saw the establishment of the defence industry in the 1970s.

In August 1970, the Agency for Defense Development (ADD) was established; its mission was to perform R&D related to defence and other high technology applications. In addition, the ADD was tasked with progressing the development of the national defence industry. The Chaebol would inevitably be drawn into helping to build the defence industry, but so would other South Korean companies. For example, the Poongsan Corporation was established in October 1968, and by the end of 1969 it had completed the Bupyung Brass Mill. In 1973, it had become an important defence player, with the completion of the Angang Ammunition Plant. Poongsan remains a key defence supplier to this day, being the primary ammunition supplier to the country’s military.

Today and Tomorrow

From its roots in the 1970s, the South Korean defence industry would gradually evolve its capabilities in a systematic manner to the point where it could develop and produce highly sophisticated equipment for indigenous requirements and for export. An excellent example of this is how the aerospace segment developed from the 1980s onwards in terms of combat aircraft.

It began with the signature of a contract for the local production of the Northrop F-5E/F in 1980 for the Republic of Korea Air Force (ROKAF). In total, 68 aircraft were delivered to ROKAF between 1982 and 1986. By the end of the 1980s, the ROK started work on two indigenous programmes, with the ADD leading the programmes and working with local industry. The first of these programmes was the KTX-1 turboprop trainer and the second was the KTX-2 advanced jet trainer. Both of these were logical programmes as they would replace large numbers of elderly US-supplied aircraft.

The KTX-1 conducted its maiden flight in 1991, with ROKAF ordering 85 KT-1 trainers and the 20 KA-1 light attack aircraft in 1999. Indonesia became the first export customer, eventually purchasing 17 aircraft; Turkey acquired 40 KT-1T, Peru 10 KT-1P and KA-1P aircraft, and Senegal acquired four KA-1S variants. In the case of Turkey and Peru, local assembly of the KT-1 was part of the contract. The KT-1/KA-1 would be the first military aircraft exported by the ROK.

The next stage in aircraft development would come through the medium of the Korean Fighter Program (KFP). In December 1989, the ROK announced it would acquire 120 F/A-18 aircraft for the KFP requirement. For various reasons, this acquisition never happened, instead the ROK decided on the Peace Bridge 2 programme under which they would acquire 80 F-16C Block 52 and 40 F-16D Block 52 aircraft. Lockheed Martin supplied 12 aircraft directly, with 36 aircraft assembled from kits in the ROK and the remaining 72 aircraft produced in the ROK. The first ROK-produced F-16C/D was delivered in June 1997 and the Peace Bridge II programme was complete in 2000. As a part of KFP, Lockheed Martin also provided assistance on the development of the KTX-2 programme.

At the end of the 1990s, the impact of the Asian financial crisis was also felt in the ROK. As a part of their recovery efforts, in 1999 the government helped to create Korea Aerospace Industries (KAI) as the national aerospace champion. KAI was built on the integration of the aerospace activities of Samsung, Hyundai and Daewoo. To sustain KAI, an order was placed for 15 F-16C Block 52 and five F-16D Block 52 aircraft under the Peace Bridge III programme, with deliveries taking place in 2003 to 2004.

In the meantime, the KTX-2 programme had reached its critical mass in 2002 with the first flight of the newly designated T-50 advanced jet trainer. The primary customer was ROKAF with the objective to replace elderly trainers such as the T-37 and the T-38, as well as the A-37 light attack aircraft. Four variants were developed for ROKAF: the T-50 advanced jet trainer; the T-50B version for the ROKAF Black Eagles aerobatic team; the TA-50 fighter lead-in trainer/light attack aircraft; and the FA-50 dedicated combat variant. ROKAF would order some 140 aircraft, with 20 remaining on order.

The aircraft would also prove highly successful in the export marketplace with Indonesia the first export customer, ordering 16 T-50i aircraft and then a second batch of six in 2021. Other customers included Iraq with 24 T-50IQ aircraft ordered, and the Philippines, with 12 FA-50PH aircraft. Thailand acquired an initial batch of 12 T-50TH and then ordered two more, all of which are combat capable. More recently, Poland ordered 12 FA-50 Block 10 aircraft due to be delivered later this year and 36 FA-50PL (based on the FA-50 Block 20) scheduled for delivery between 2025 and 2028. Lastly, in February it was announced that Malaysia had ordered 18 FA-50s for delivery from 2026.

In total, these acquisitions amount to some 298 T-50/FA-50 aircraft in service or on order, with the number of export aircraft roughly equivalent to aircraft ordered by the ROKAF. Obviously, there was dissatisfaction stemming from working with Lockheed Martin, which meant they were unable to win the US Air Force T-X trainer programme. However, the T-50/FA-50 has, and continues to be a successful programme for KAI and the ROK.

The next stage in the evolution of KAI and ROK combat aircraft is the KF-21 Boromae. The design, development and production of an advanced combat aircraft was the next logical step in the evolution of the ROK aerospace industry. The ROKAF requirement was for an aircraft to replace the last F-4E Phantom and F-5E/F aircraft in service; in total, the ROKAF envisages buying 120 KF-21 aircraft. With the apparent decision by the Republic of Korea Navy (ROKN) to increase the displacement of its future CVX aircraft carrier to accommodate the KF-21N, the naval variant of the aircraft, the number of KF-21 aircraft increase significantly, especially since the ROK is unlikely to stop at one carrier!

In an astute move, the ROK decided to find an international partner for the KF-21 programme, leading to Indonesia taking a 20% stake in the programme. Indonesia has had problems financing its workshare, but ultimately it is highly likely to procure in the region of 40 KF-21 for its air force. Reportedly, Poland has expressed an interest in the KF-21 and other T-50/FA-50 customers represent a strong potential market. The first KF-21 prototype flew on 19 July 2022, the second in November and the third in January 2023, at which point the KF-21 had made its first supersonic flight. The first two-seat prototype flew in February this year and two more prototypes will join the test programme by the middle of this year. The flight test programme is due to be completed in 2026.

Mention should also be made of another KAI programme that involves international collaboration. This is the MC-X transport aircraft programme, envisaged as a C-130 replacement capability. In January, a Memorandum of Understanding (MoU) was signed with the UAE covering the joint development of a ‘multi-mission cargo aircraft,’ the MC-X. The aircraft is due to be ready to enter service in the 2030s.

The story of how KAI became a global player is just one element within the broader theme of how the ROK became a major defence exporter. Mention should also be made of the Hyundai Rotem K2 tank programme, which achieved its first export order from Poland last year and whose technology provides the basis for the Turkish Altay tank programme. We could also mention submarine sales to Indonesia and frigate sales to the Philippines and Thailand. Suffice to say, the South Korean defence industry truly is a global player and fully intends to expand its market share.

David Saw